Millers, Katies and Rivers owner Specialty Fashion has almost quadrupled its full-year loss to $8.39 million, from last year’s $2.19 million, amid subdued consumer spending.
Revenue fell 2.1 per cent to $808.9 million for the 12 months to June 30 with comparable sales down two per cent on a year ago due to heavy discounting.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA), excluding impairments associated with the store exit costs of City Chic USA stores, rose 6.6 per cent to $26.7 million, but comparable store sales across the group declined 2 per cent for the year ended 30 June.
A return to positive EBITDA growth at Rivers and strengthening sales for City Chic was offset by negative growth in the Millers, Crossroads, Autograph and Katies brands, with total group sales slipping 2.1 per cent to $808.9 million.
Gross margins improved by 0.4 per cent through the year, but CEO Gary Perlstein has signalled intensifying promotional activity in the first weeks of FY18, which is expected to continue.
The company gave no specific guidance, but said that there have been no additional discussions with prospective group buyer Al Alifia group since it signalled that an estate bungle was preventing it from transacting the prospective acquisition in February.
$7.4 million in exit costs and impairments were recorded in relation to a decision to close City Chic’s US stores, with strengthening presence in department stores such as Macy’s and Nordstrom “removing the necessity for City Chic standalone stores”.
“Depite it being a difficult trading enviroment, the improved EBITDA for the year was delivered through our core continuous business improvement strategy. This strategy focussed on profitability growth across all facets of the business, underpinned with a determination to control and reduce costs of doing business wherever possible,” Perlstein told the market on Tuesday morning.
“Our clear focus for the year was the turnaround of Rivers to a profitable brand, and we successfully achieved this. City Chic was also a standout and continues its positive trajectory both locally and internationally. Our mature brands, including Millers, Katies, Crossroads and Autograph continued their growth in online sales, however found trade challenging,” he continued.
Online sales increased by 15 per cent to $83.7 million through the year, bringing the total proportion of digital transactions to 10.4 per cent on the back of a network wide click-and-collect rollout.
Weakening in-store sales correlated with 79 closures through the year, offset partially by 30 openings, bringing the total portfolio to 1,044.
Underlying cost-of-doing business decreased by $7.7 million, but increased slightly as a proportion of sales due to slowing in-store momentum.
Perlstein said the immediate focus in FY18 will be on “rejuvenating” mature brands within the portfolio, while enhancing the group’s digital position and continuing to grow River’s profitability.
